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An amendment to the Housing Bill, currently going through Parliament, will limit occupation rights for new tenancies to five years at the most.
Labour said the move would break up communities.
But the government said it would improve the ability of councils to give homes to those who need them most.
Up to now, most council tenants have been allowed to remain in their homes for as long as they wanted.
In some cases, tenants can even pass their properties to a next of kin.
"People will be astonished that ministers are legislating to deny families a stable home," said John Healey, Labour's housing spokesman.
"This will cause worry and upheaval for tenants, and break up communities."
If the amendment is passed into law, councils will have to provide fixed-term tenancies of between two and five years.
At the end of the term, local authorities could extend the lease or ask a tenant to move.
However, the rule change will only apply to new tenants. Existing householders will not be affected.
"It is only right that tenancies are reviewed after several years, to identify whether the circumstances of tenants have changed," said a spokesperson for the Department of Communities and Local Government (DCLG).
"This is about ensuring we make the best use of our social housing, based on need and income."
Future council tenants in England are likely to lose the right to stay in their homes for life, the government has said.